If you’re thinking about investing for post-yachting life, the UK is worth a look
If you’ve ever been given a stock tip, chances are you’ve been given it too late. More often than not, the best value and best performing investment an individual can make is in an index fund, or a big basket of companies you invest in through one vehicle, versus buying hundreds of individual stocks. The most famous and common is the S&P 500, which tracks the US’s largest 500 companies, and is up nearly 100 percent in the last five years.
However, it has been battered and bruised by Trump, tariffs and Musk. Also, much of the gains have been from the Magnificent Seven — Alphabet (Google), Amazon, Apple, Meta Platforms (Facebook), Microsoft, NVIDIA and Tesla (now Broadcom). Many investors have begun to pull away from the S&P 500 and are looking at other markets to diversify their long-term investments.
While I wouldn’t claim this market to be the silver bullet, there is certainly a case to make for the UK at the moment.
First, the UK is currently good value. Brexit and other political issues have resulted in many companies avoiding listing on the London Stock Exchange. This and other factors mean many firms are trading below their fair value and thus are making returns. Vanguard’s FTSE 100 Index has returned 11.8 percent in the last year and 12.51 percent in the last five years. Morningstar describes this index as “maintaining a cost advantage over competitors, priced within the cheapest fee quintile among peers.”
Second, many UK stocks are high-dividend paying, making them ideal for income-generating portfolios. These dividends can offset the returns of their US counterparts. In May, British American Tobacco paid a quarterly dividend of 60p per share, and Croda and Reckitt Benckiser paid final dividends of 63p and 121p respectively.
And third, more investment is coming. UK Chancellor Rachel Reeves has outlined plans for 10 percent of pension funds to be invested in UK markets, worth about £25bn. EY also reported that the UK received 25 percent of all European financial services foreign direct investment.
While no one can predict the future, there are positive indicators if you’re looking to invest in a market for the long term.